Amanda Janoo argues that we must stop peddling ‘one-size-fits-all’ solutions

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Participants at the conference – New Industrial Policy in Africa: How To Overcome the Extractivist Trap? 3-4 November 2015, Antananarivo, Madagascar. Photo: Friedrich-Ebert-Stiftung

“There is only one measure of success: are you exporting something different than you were five years ago?” a man bellows across the conference hall.

The most recent industrial policy conference in Madagascar spanned two days and consisted of experts and academics promoting new models on the micro-foundations of innovation or the promises of successful “structural change”. In the back of the hall, a group of Malagasy policy practitioners listen silently. After the second session, an economic advisor to the president takes me aside. “I’m a simple man so I don’t understand all of this,” he says as he waves at the PowerPoint projector. “But I know that our people are struggling and that they need jobs and better opportunities.” It seems that when considering the extreme levels of poverty in Madagascar, the industrial policy concepts and theories on show lack relevance for their day-to-day work.

I realize in speaking with this man that he is a “civil servant” in every sense of the term. He believes that the government has a responsibility to develop an economy that serves the needs and desires of its population, a goal that remains mostly absent from the conference, and from industrial policy discussions at large. Though the welfare of the general populace of Madagascar should be the predominant concern when discussing industrial policies, such “non-technical” considerations are likely to be met with eye-rolls if openly discussed in such a conference setting.

The last time industrial policy had its heyday, development was viewed as a singular pathway that transforms poor countries into rich, Western nations through the power of emulation. GDP growth was believed to be the magic elixir that would bring the masses out of poverty and deliver development and property to all. Industrial policy emerged within this context, and was understood as the methods employed by the government to stimulate development and achieve an “industrialized” economic structure. Our understanding of industrial policy had two parts: The first was functional, in that industrial policy represented a government’s active intervention in the economy to achieve their objectives. The second was a value judgment, which assumed that the main purpose of industrial policy was to promote growth through more productive activities.

Beginning in the late 1970’s, industrial policy faded from the limelight and governments were told to take a hands-off approach to development, and to trust in the transformative powers of the global free market. This ‘one-size-fits-all’approach resulted in situations where growth was accompanied by rising inequalities, persistent poverty and devastating environmental degradation. As a result, the development community started to emphasize that the pattern of growth mattered just as much, if not more than the pace. Around the world, developed and developing countries alike began reasserting their right and responsibility to influence their development trajectories in accordance with their unique context and objectives. Such a situation was therefore ripe for the re-emergence of industrial policy as a tool for achieving a holistic understanding of development. We can see Brazil using industrial policy to promote broad-based poverty reduction, India attempting to ensure a more stable domestic food supply, and China encouraging the expansion of green industries. The SDG9’s emphasis on “inclusive and sustainable industrialization” seems to have emerged in acknowledgement of this phenomena.

However, for industrial policy advisors the issue remains a technical one. The industrial policy literature and advice continue to be based on an outdated notion of “successful” development, one that is achieved through expansion of manufacturing as the locus of technology, innovation and productivity enhancement. This approach still maintains that there is a single, correct method of developing and that there is a silver-bullet. There is a great amount of irony in the fact that the very motivations that led to the re-emergence of industrial policy are the same ones that we discredit or ignore. Countries want to use their collective power to influence their economic development in new ways but industrial policy experts keep telling them that the old way is the only way.

The terms inclusiveness and sustainability actively reject a ‘growth-first-everything-else after’approach to development, yet as I sat next to the Malagasy economic advisor, we hear nothing but experts speaking about the importance of global value chains and export diversification for growth. He then leans over to me and speaks solemnly about how little control they had when a foreign nickel extractor came in and promised job creation and growth in exchange for low levels of taxation, but ended up leaving nothing but mass unemployment and contamination when company left the country in search of a more “attractive” investment location.

Industrial policy has the potential to help countries regain some of their rapidly deteriorating economic sovereignty and pioneer alternative development trajectories that are appropriate for their context and objectives. But if we are to do this, we must stop making this discipline appear so prescriptive that we cannot connect with even the best-intentioned of policy practitioners. While development thinking has evolved, our understanding of industrial policy has not. In order to effectively tackle the issues of our time, it is more important than ever that we stop peddling ‘one-size-fits-all’ solutions and start supporting countries in using industrial policy to promote the economic activities they believe will serve the multi-faceted needs and desires of their populations.

• Amanda Janoo works for The Industrial Policy Organization. She was previously an industrial policy analyst in UNIDO’s Industrial Policy Advice Unit. Prior to joining UNIDO, she worked in India and Indonesia on issues relating to economic development, employment generation and enterprise development.